, A18-1214, A18-1406

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2018).

STATE OF MINNESOTA
IN COURT OF APPEALS
A18-0559, A18-1214, A18-1406

Scott Kowalewski,
Respondent,

vs.

BNSF Railway Company,
Appellant.

Filed April 22, 2019
Affirmed in part, reversed in part, and remanded
Worke, Judge

Hennepin County District Court
File No. 27-CV-17-145

Eric J. Magnuson, Robins Kaplan LLP, Minneapolis, Minnesota;

Paula M. Jossart, Jossart Law Office, LLC, Burnsville, Minnesota; and

David M. Bolt, Joseph M. Sayler, Bolt Hoffer Boyd Law Firm, Anoka, Minnesota (for
respondent)

Sam Hanson, Tara Reese Duginske, Briggs and Morgan, P.A., Minneapolis, Minnesota;

Daniel A. Haws, HKM, P.A., St. Paul, Minnesota; and

Patrick Sweeney, Sweeney Law Firm, PA., White Bear Lake, Minnesota (for appellant)

Considered and decided by Worke, Presiding Judge; Cleary, Chief Judge; and
Slieter, Judge.
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U N P U B L I S H E D O P I N I O N
WORKE, Judge
Appellant-railroad challenges the district court’s imposition of discovery sanctions
and other adverse decisions that the district court made in the course of a Federal
Employers’ Liability Act (FELA) action brought by a former employee. We affirm in part,
reverse in part, and remand.
FACTS
Respondent Scott Kowalewski was working for appellant BNSF Railway Company
in Fridley at the Northtown railyard on January 19, 2014, when workers were exposed to a
strong smell, and at least two workers experienced physical symptoms. Kowalewski was
taken to the hospital. Kowalewski was diagnosed with reactive airways disease syndrome,
vocal cord dysfunction, posttraumatic stress disorder, and Parkinsonism . Kowalewski
believed that he was exposed to toxic gas emitted from one or more of 11 hydrocarbon tank
cars carrying “casing head gasoline.” The tank cars were not identified as the likely source
of the leak on the date of the incident and they were routinely added to trains that left the
yard within a few days thereafter.
Kowalewski sued BNSF in December 2016. Kowalewski’s counsel gave notice that
an expert would inspect the railyard and tank cars on July 11, 2017. BNSF objected on the
30th day and indicated that date would not work, but agreed that the inspection could take
place on July 19. BNSF’s counsel explained that BNSF did not own the tank cars, but was
working with the owners to get them back to Minnesota for inspection. The district court
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specifically asked whether the cars would be available on July 19, and BNSF’s counsel
indicated that railroad staff “believe[d] so.”
BNSF failed to produce the tank cars for inspection on July 19. On August 11, t he
district court indicated that BNSF’s counsel had given the impression that BNSF was able
to get the cars for Kowalewski to inspect. The district court acknowledged that BNSF had
not made any promises, but said it was trying to get the cars.
At a second hearing concerning discovery on September 11, 2017, BNSF’s counsel
indicated that it had been trying to get the cars, but the owners were not cooperating. The
district court, expressing frustration, stated that BNSF ’s previous explanations of the
process it was following to obtain the cars, including representations it was working on it
“every day,” was inconsistent with BNSF’s assertion. The district court explicitly ordered
that “all 11 hydrocarbon cars be produced for inspection in the Northtown yard” during the
week of September 24- 29, 2017. In a September 18, 2017 order, the district court found
that BNSF “has the ability to comply with the [c]ourt’s order because [it] has control over
the 11 cars.” The district court also found that “BNSF has the practical ability to produce
the cars for inspection at the Northtown railyard if and when it so desires.”
In late 2017 and early 2018, the parties filed several motions. Kowalewski moved
for sanctions, alleging discovery violations, spoliation, and misconduct. BNSF moved to
exclude certain expert testimony. O n February 5, 2018, the district court (1) granted
Kowalewski’s motion for sanctions, struck BNSF’s defenses on liability and causation, and
entered judgment for Kowalewski on those issues, plus costs and attorney fees; (2) limited
the upcoming trial to damages only; (3) denied BNSF’ s motion to exclude expert
4
testimony; and (4) scheduled a hearing on contempt and monetary sanctions against BNSF
and its counsel.
In its February 5 order, the district court condemned BNSF’s discovery conduct.
The district court stated that “BNSF misled Kowalewski by representing that he was
exposed to sulfur dioxide,” “failed to produce any information or documentation related to
the seven related release incidents,” and “attempted to obscure the true source of the
chemical release by focusing on cars other than the 11 hydrocarbon cars.” The district
court found that, as a result, Kowalewski was deprived of an accurate diagnosis and
appropriate treatment.
The district court also found that BNSF spoliated evidence by failing to inspect and
preserve evidence at the scene and by destroying or intentionally failing to secure field and
yard audio-video evidence, and documents associated with the 11 hydrocarbon cars.
Finally, the district court found “Kowalewski also presented evidence that BNSF
suppressed the identity of a critical witness . . . . BNSF had initially identified a different
employee as the hump tower operator on the date of exposure, and disclosed [the actual
tower operator] only after reaching a confidential settlement with him,” and “[f]ollowing
its in camera review of [the BNSF claims manual], the [c]ourt learned that BNSF had
produced a version of this document that was revised after the incident.” The district court
found that these actions prejudiced Kowalewski on the issues of liability and causation.
The district court concluded:
The [c]ourt finds that BNSF has engaged in a pattern of
misconduct throughout this case characterized by late
production of documents and witnesses, production of
5
inaccurate or inconsistent documents, and by the outright
failure to produce relevant evidence. The [c]ourt finds that
BNSF’s behavior constitutes a deliberate effort to frustrate
Kowalewski’s ability to bring his claim, and that this behavior
constitutes misconduct. Kowalewski and his experts have been
prejudiced by this behavior, as it has significantly inhibited
their ability to establish issues of liability and causation in a
trial before a jury.

Following a February 2018 trial on the issue of damages, a jury found in favor of
Kowalewski in the amount of $15,343,753. BNSF moved for a new trial. The district
court denied the motion without comment.
On June 27, 2018, the district court issued an order for financial sanctions in the
amount of $1,153,507.50 in attorney fees, $89,649.25 in costs and expenses, and
$4,600,000 in post-judgment interest lost by Kowalewski “as a result of the three- year
delay caused by [BNSF]’s misconduct.” On July 27, 2018, the district court issued an
order for offsets. This appeal followed.
D E C I S I O N
Sanctions
A district court may issue orders compelling discovery and imposing sanctions for
failure to properly answer discovery. Minn. R. Civ. P. 37.01 (b), (d), .02. “The district
court’s discovery -related orders will not be disturbed absent an abuse of discretion.”
Frontier Ins. Co. v. Frontline Processing Corp., 788 N.W.2d 917, 922 (Minn. App. 2010),
review denied (Minn. Dec. 14, 2010). “A district court abuses its discretion if its decision
is against the facts in the record or if its ruling is based on an erroneous view of the law.”
6
State ex rel. Swan Lake Area Wildlife Ass’n v. Nicollet Cty. Bd. of Comm’rs, 799 N.W.2d
619, 625 (Minn. App. 2011) (quotation omitted).
BNSF disputes the district court’s finding that it had control over the 11
hydrocarbon cars, stating that the district court admittedly misinterpreted statements made
by BNSF’s counsel. BNSF argues that Minnesota has not extended the reach of sanctions
to a party who fails to produce evidence over which it does not have control. We disagree
with BNSF’s characterization of the district court’s reasoning and the circumstances that
formed the basis for this finding.
The record shows that, while the district court may have initially misunderstood
BNSF’s counsel’s statements, it had a clear understanding of them at the time of the
September 18 order. After finding that BNSF had the ability to comply with the court’s
order because it had “control over the 11 cars,” the district court explicitly stated that “[t]his
finding is based on multiple representations” by BNSF’s counsel, “including the
representation that BNSF would do its best to have all 11 cars available for inspection on
August [sic] 19, 2017 at the Northtown railyard.” The district court went on to find that
“BNSF has employed every opportunity to delay i nspection of the cars,” and recounted
several of BNSF’s delay tactics.
BNSF’s discovery misconduct was pervasive in this case. Failure to produce the 11
cars after three orders to compel is merely one example of this misconduct. Further, the
district court’s sanctions for spoliation are designed to rectify BNSF’s failure to preserve
and inspect the 11 cars on the date of the incident, not just BNSF’s failure to produce the
cars several years later. While the district court may have been frustrated at BNSF’s failure
7
to produce the cars after implying that it had the ability to do so, that does not mean that
the sanctions order, which covers a wide range of discovery misconduct, constitutes an
abuse of discretion.
Right to jury trial

Sanctions for failing to comply with a discovery order may include dismissal of all
or part of a claim . Minn. R. Civ. P. 37.02(b)(3); see also Minn. R. Civ. P. 16.06 (“If a
party or party’s attorney fails to obey a scheduling or pretrial order, . . . the court, upon
motion or upon its own initiative, may make such orders with regard thereto as are just,
including any of the orders provided in Rule 37.02(b)(2), (3), (4).”). When a party has
willfully and persistently failed to comply with a discovery order without justification or
excuse, that party has forfeited the right to a trial on the merits. Frontier, 788 N.W.2d at
922.
“We review a district court’s decision to impose spoliation sanctions for abuse of
discretion.” Miller v. Lankow, 801 N.W.2d 120, 127 (Minn. 2011). “A party challenging
the district court’s choice of a sanction has the difficult burden of convincing an appellate
court that the district court abused its discretion.” Id.
Although the choice of sanctions for failure to comply with discovery is within the
district court’s discretion, a sanction “must be no more severe . . . than is necessary to
prevent prejudice to the movant.” Chicago Greatwestern Office Condo. Ass’n v. Brooks,
427 N.W.2d 728, 730 -31 (Minn. App. 1988) (quotation omitted). An appellate court
examines five factors to determine whether a district court abused its discretion in imposing
discovery sanctions:
8
(1) if the [district] court set a date certain by which compliance
was required, (2) if the [district] court gave a warning of
potential sanctions for non-compliance, (3) if the failure to
cooperate with discovery was an isolated event or part of a
pattern, (4) if the failure to comply was willful or without
justification, and (5) if the moving party has demonstrated
prejudice.

Frontier, 788 N.W.2d at 923.
Here, the district court set dates for compliance. In its September 18, 2017 order,
the district court indicated that it was contemplating holding BNSF in contempt if it failed
to comply with the order. Based on the record, BNSF’s failure to cooperate with discovery
was not an isolated event in this case or in others. The district court also stated many times
in its February 5, 2018 order that BNSF’s conduct was “deliberate,” “willful,” and
“purposeful.” The district court found that these actions prejudiced Kowalewski on the
issues of liability and causation. Therefore, the district court did not abuse its discretion
by its choice of sanction.
BNSF further argues that the district court abused its discretion by deciding factual
issues in its sanctions order. While true that certain disputed facts were effectively resolved
by the district court in its sanctions order striking BNSF ’s defenses on liability and
causation, BNSF attempts to narrow the focus of the district court’s sanctions to the 11 cars
and the factual disputes that surround them. However, the district court outlined numerous
examples of BNSF’s misconduct or misdirection throughout the p retrial process. The
district court found that BNSF’s misconduct prejudiced Kowalewski to such a degree as to
require striking BNSF’s defenses on liability and causation. We agree.
9
Insofar as the district court decided factual disputes, it did so to prevent BNSF from
being rewarded for its own misconduct. These disputes included whether the 11 cars were
the source of the toxic chemicals that led to Kowalewski’s injury and whether the
chemicals could have caused Kowalewski’s i njury. These factual inquiries were tainted
by BNSF’s misconduct. BNSF failed to preserve the 11 cars on the day of the incident,
preserve shipping papers regarding the contents of the cars, preserve video of the incident,
or produce the actual cars for inspection. These failures severely inhibited Kowalewski’s
ability to prove issues such as whether the 11 cars contained the source of his injury and
whether the materials within the car could have caused his injury.
The district court contemplated “the factors considered by Minnesota courts in
sanctioning spoliation,” and found “that all factors support sanctions in the present case.”
The district court stated that “[t]he degree of prejudice suffered by Kowalewski as a result
of BNSF’s conduct throughout the present case is substantial, and severely inhibits his
ability to fully present liability and causation claims to a jury.” The district court outlined
BNSF’s “misconduct . . . perpetrated in bad faith,” and found that this behavior “placed
Kowalewski at a tremendous disadvantage.” It is important that BNSF not be allowed to
benefit from its misconduct because “the destruction of evidence, especially intentional,
should not be condoned because it violates the spirit of liberal discovery [and] manifests a
shocking disregard for orderly judicial procedures and offends traditional notions of fair
play.” Federated Mut. Ins. Co. v. Litchfield Precision Components, Inc., 456 N.W.2d 434,
439 (Minn. 1990) (quotation omitted). Therefore, the sanctions were appropriate and not
any more severe than necessary.
10
As such, the district court did not abuse its discretion or violate BNSF’s
constitutional rights when it ordered sanctions and resolved factual disputes in
Kowalewski’s favor in an effort to rectify BNSF’s misconduct.
Evidence

“The admission of evidence rests within the broad discretion of the [district] court
and its ruling will not be disturbed unless it is based on an erroneous view of the law or
constitutes an abuse of discretion.” Kroning v. State Farm Auto Ins. Co., 567 N.W.2d 42,
45-46 (Minn. 1997) (quotation omitted).
BNSF challenges the district court’s ruling that prevented the presentation of certain
evidence at the damages trial, such as emergency -room records and medical -expert
testimony. However, BNSF’s argument fails to recognize the district court’s attempts to
remedy BNSF’s pretrial misconduct.
The district court found that this evidence was tainted by BNSF ’s misconduct in
informing “Kowalewski and his doctors . . . that he ‘was, at most, exposed to sulfur
dioxide.’” Similarly, the opinion of BNSF’s medical experts, based on the medical report
of one of BNSF’s experts, was defectively founded on BNSF informing those experts that
Kowalewski was exposed to sulfur dioxide or natural gasoline. As previously stated,
evidence regarding liability or causation was clearly excluded based on the district court’s
order striking these defenses.
Because we conclude that the district court did not abuse its discretion by striking
BNSF’s defenses on causation and liability, we likewise conclude that the district court did
11
not abuse its discretion in denying these pretrial motions in an attempt to prevent BNSF
from benefitting from its misconduct.
New trial

“[An appellate court] review[s] a district court’s new trial decision under an abuse
of discretion standard.” Moorhead Econ. Dev. Auth. v. Anda, 789 N.W.2d 860, 892 (Minn.
2010). An appellate court “will not set aside a jury verdict on an appeal from a district
court’s denial of a motion for a new trial unless it is manifestly and palpably contrary to
the evidence viewed as a whole and in the light most favorable to the verdict.” Navarre v.
S. Wash. Cty. Sch. , 652 N.W.2d 9, 21 (Minn. 2002) (quotations omitted). We generally
defer to the district court’s denial of a new trial on the grounds that the evidence justifies
the verdict because “[a] district court is in a better position than an appellate court to assess
whether the evidence justifies the verdict.” Clifford v. Geritom Med, Inc., 681 N.W.2d
680, 687 (Minn. 2004).
BNSF urges us to conclude that the district court abused its discretion when it denied
BNSF’s motion for a new trial without comment. However, the issues raised in BNSF’s
motion for a new trial were simply a recitation of previous arguments already settled by
the district court, and BNSF cites no caselaw that requires the district court to provide
analysis on issues that it has already decided. Among these arguments were familiar ones
such as, “[t]he February 5, 2018 Sanctions Order Was Errone ous,” because of the district
court’s findings regarding BNSF’s misconduct, “BNSF Was Prejudiced By Erroneous
Evidentiary Rulings,” “BNSF Was Prejudiced By The Erroneous Admission of
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[Kowalewski]’s Expert Testimony,” and “BNSF Was Prejudiced By The Exclusion of All
Evidence Regarding the Incident.”
Because BNSF’s motion for a new trial raised no new issues, and because the district
court is in a better position than this court to assess whether the evidence presented at trial
justifies the verdict, the district court did not abuse its discretion in denying BNSF’s motion
for a new trial without comment.
Expert testimony

BNSF argues that its motion to exclude Kowalewski’s expert testimony was denied
as moot by the district court in its February 5, 2018 order because it went to the issue of
causation, which was decided as a mat ter of law. BNSF contends that if the February 5
order is reversed as an abuse of discretion, then the denial of its motion to exclude expert
testimony should also be reversed.
BNSF again fails to acknowledge the effect of its own misconduct, including its
failure to preserve evidence regarding the amount or makeup of the contents in the
hydrocarbon cars, on the district court’s ruling. However, because we do not determine
the February 5, 2018 order to be an abuse of discretion, the issue of expert testimony
regarding causation is indeed moot.
Due-process rights

BNSF argues that the district court’s monetary sanctions were punitive and therefore
violated BNSF’s due- process rights because it was not afforded criminal contempt
procedural protections. BNSF further contends that the district court overstated attorney
fees and faulted BNSF for delay in reaching judgment.
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BNSF’s arguments are misguided. In its own briefing, BNSF cites the proposition
that a sanction is compensatory, and therefore civil, “only if it is calibrate[ d] to [the]
damages caused by the bad-faith acts on which it is based.” See Goodyear Tire & Rubber
Co. v. Haeger, 137 S. Ct. 1178, 1186 (2017) (quotation omitted). Here, the district court’s
imposition of monetary sanctions repeatedly cites BNSF’s “misconduct” as the reason for
awarding fees and costs. The award of $4,600,000 as post-judgment interest was an
attempt to remedy what the district court found to be a three- year delay in the proceeding
at the hands of BNSF. The district court’s award of attorney fees was based on an estimate
of hours worked on the issues of causation and liability and on an hourly rate that were
both approved by the district court as reasonable.
Additionally, despite BNSF’s assertion that the sanctions amounted to criminal
contempt, the district court never held BNSF or its counsel in contempt, criminal or
otherwise. BNSF argues that the district court awarded these monetary sanctions in order
to “punish” it and “deter future misconduct” ; however, the district court’s award is an
attempt to remedy BNSF’s misconduct in the present case, which is entirely within the
district court’s authority. See Patton v, Newman Corp., 538 N.W.2d 116, 118 (Minn. 1995)
(stating that a district court’s inherent authority permits it to deliver “remedies for
wrongs”). We note that caselaw contemplates deterrence as one reason for imposing
sanctions. Miller, 801 N.W.2d at 132.
Accordingly, and given this court’s deference to the district court, the monetary
sanctions did not violate BNSF’s due-process rights or constitute an abuse of discretion.
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Post-judgment interest rate
BNSF argues that the district court incorrectly used the Minnesota interest rate
rather than the federal rate to calculate post -judgment interest. “ We review de novo
whether FELA preempts state law.” Alby v. BNSF Ry., 918 N.W.2d 562, 569 (Minn. App.
2018), review granted (Minn. Oct. 16, 2018). In Alby, this court recently affirmed the
application of the federal rate in FELA cases. Id. 1 We therefore reverse and remand on
this issue with instructions to the district court to apply the federal interest rate to its post-
judgment award.
Offsets and costs

In a FELA action, BNSF is allowed to setoff “any sum it has contributed or paid to
any insurance, relief benefit, or indemnity that may have been paid to the injured
employee.” See 45 U.S.C. § 55 (2012).
BNSF argues that the district court erroneously declined to setoff medical expenses
it helped pay through a group health insurance plan. But BNSF was not granted these
amounts because it offered no proof of the bills it claimed to have paid. Instead, when
asked to provide such bills, BNSF simply stated that Kowalewski should submit his bills
to BNSF to be paid. Accordingly, the district court did not abuse its discretion by denying
BNSF’s motion for offsets with regard to past medical expenses, because BNSF failed to
provide adequate proof to support its request.

1 Our precedent in Alby binds us here, but we note that review has been granted in that case.
15
BNSF further argues that Kowalewski’s entire award should be taxed as earned
income and that amounts be withheld to satisfy taxes required by the Railroad Retirement
Act (RRTA). FELA damages for lost wages qualify as taxable compensation under the
RRTA. See BNSF Ry. v. Loos, No. 17-1042, 2019 WL 1005830, at *8 (U.S. Mar. 4, 2019).
In this case, however, the jury awarded Kowalewski $15,343,753, but none of that amount
was designated as wage loss on the special-verdict form. As such, none of the award need
be withheld.
Affirmed in part, reversed in part, and remanded.